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Florida Lawmakers Act On Lottery School-Aid Shortfall

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By CATHERINE DOLINSKI | The Tampa Tribune

Published: September 11, 2008

TALLAHASSEE - Falling lottery revenue forced lawmakers on Wednesday to transfer $48 million between trust funds to shore up education spending normally supported by ticket sales.

But with state tax collections also plummeting, and lawmakers talking about cutting 4 percent of all state spending this year, Florida's schools and universities appear to be headed for a tight budget squeeze.

Profits from lottery ticket sales feed the state's $1.52-billion Educational Enhancement Trust Fund. Among the "educational enhancements" that it supports: the Bright Futures Scholarship program and bonuses for K-12 public schools based on student test scores. The fund also supports school construction and supplies limited funding that school districts can spend on special needs or use to boost their operating budgets.

In July, state analysts scaled back their estimates for lottery transfers to the education trust fund in 2008-2009 by $75 million, down to $1.24 billion. That's also down from the lottery's transfer of $1.28 billion to the education fund last fiscal year.

The state's lowered projections for lottery profits reflect a predicted uptick in sales beginning in January, when the Powerball game will come to Florida.

The July lottery forecast translated into a $48-million shortfall in planned education spending. Wednesday, the joint Legislative Budget Commission voted to transfer that sum out of another trust fund supported mostly with revenue derived from unclaimed property. Abandoned property receipts have been higher than expected, creating a surplus of $135.3 million in that account, which also supports schools.

But shifting that money is a one-time fix. Meanwhile, the cost of Bright Futures continues to rise, eating more deeply into the state's flagging lottery profits. Earlier this year, a Tribune analysis showed that while the cost of the merit-based scholarship fund has grown by nearly 165 percent, lottery funding for education had grown at less than one-fourth of that rate.

Bright Futures covers 75 to 100 percent of tuition and fees for students with 3.0 grade point averages or better, depending on their exact GPA and standardized test scores. Because of that structure, the program grows proportionate to college tuition levels and the number of students using the scholarships.

House Schools and Learning Council Chairman Joe Pickens is among those who support "de-coupling" the scholarships from tuition to control the cost.

"There comes a time where, if we don't do anything, if we don't change anything, there comes a point where they intersect, and Bright Futures actually consumes all of lottery," said Pickens, R-Palatka.

K-12 public schools, universities and community colleges will start to feel that pinch before that point, Pickens said.

But he noted that over time, lottery dollars have accounted for less and less of education spending - 7.1 percent of a $21-billion education budget.

Like many lawmakers, House Speaker-designate Ray Sansom spoke protectively about the popular Bright Futures program when asked Wednesday about the prospect of reining it in somehow.

"Bright Futures is probably one of the most stable programs we have," he said. "It's accomplished everything we wanted it to; it's keeping our bright students in Florida and I think we've made a commitment to families in Florida that if their students work hard, get good grades and do everything right, that all or part of their college will be paid for.

"I hope, out of all the challenges that we run into, that that will be the last thing we take a look at," he added.

Education remains a top priority, he said, noting that when lawmakers reduced the state budget last year by 10 percent, the hit for K-12 education was less than 2 percent. "I do not see that changing; we'll find the money somewhere."

But with a state budget shortfall of more than $1.4 billion projected for the current year, Gov. Charlie Crist has ordered a 4 percent spending holdback across all state agencies and programs that lawmakers could make permanent. If they don't make substantial cuts, next year's shortfall could top $3 billion.

Wednesday, lawmakers agreed to a request from Crist to use $672 million from state reserves to narrow the current year's budget gap to $795 million. Amy Baker, director of the Office of Economic and Demographic Research, spoke to lawmakers Wednesday on options available this year and next, including tax increases and budget cuts. Crist also can borrow up to $1 billion this year from the Lawton Chiles Endowment, which supports health programs.

Sansom said it's too early to say exactly how the state will handle the rest of this year's shortfall, which could trigger a special legislative session after the November election. Meanwhile, school districts are tightening their belts as they nervously await the full impact of declining revenue.

"There's a point after which there's not much left to cut. Something's going to have to give," said Jim Hamilton, a consultant with Hillsborough County Public Schools.

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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